topic 5.

1. Customer loyalty matters because selling more to existing
customers is easier, and cheaper, than finding and selling to
new ones.
Loyal customers tend to buy more, more regularly. And
they will frequently recommend your business to others.
This lecture covers:
•Understanding who your most valuable customers are.
•How to achieve a high standard of customer care for all
your customers.
•How to turn your most valuable customers into your most
loyal customers.

2. 1.1. Make customer care a key part of your
business strategy.
Effective customer relationship management means organizing
your entire business to focus on the needs of customers.
•List your top key accounts, and give these customers the best
service.
•Make sure customer-facing employees have access to all the
information they need to serve customers efficiently.
Give them the power to make certain decision independently.
•Draw up a set of procedures and standards to be used wherever
customers have direct contact with your business.
For example: set standards for speed and courtesy when answering
phone calls.

3. 1.2. Learn as much about your different
customer segments as you can.
•Find out what, when and how customers buy, and use this
information to improve the service you offer.
Use your database to record information about your
customer's buying habits so you can tailor your offer and
service.
For example, a travel agent could send customers information about
their favorite resorts at the time they normally book holidays

4. •As part of your sales and marketing strategy, set out the
levels of service you plan to offer your different customer
types.
For example, you might assign key account managers to your largest
or most profitable customers.
•Find out more about your customers by generating
opportunities for feedback .

5. 1.3. Develop a brand around your
company, products or services.
If customers can identify with your company and feel good
about it, they will be more likely to remain loyal.
•Create a consistent, clearly defined identity for your
business or product.
•Advertise to build brand awareness of your product or
service.
However strong your brand is, it should always be
accompanied by consistently high levels of customer
service.

6. 1.4. Design and deliver a 'customer
experience' to address how you handle
customers when they contact your business,
whether by phone, letter or email.
•Do you address customers by their first name or use a
more formal form of address?
•Follow up queries with a 'thank you' letter, email or
phone call.

7. Whatever added extras you may offer, they will be useless
if you do not give your customers excellent basic service.
2.1. Encourage employees to deliver high-quality
customer care.
•Make sure employees have good basic communication
skills.
For example, a poor telephone manner will ruin the credibility of a
telesales company.
•Train employees in job-specific skills.
For example, get sales people to listen to the customer more, so they sell
intelligently, not aggressively.

8. •Train all relevant personnel how to answer and deal
with telephone calls.
•Make sure employees can handle complaints
effectively.
They should apologize, be sympathetic, listen, establish
the facts, agree what to do, and then do it.
Ask employees for ideas on how your customer service
could be improved.

9. 2.2. Think of ways to make life easier for customers.
For example, a retailer might provide customer car
parking, and a simple procedure for returning
unwanted goods.
•Concentrate on providing quality service in key areas.
For example, customers often complain that deliveries or
maintenance people fail to arrive on time.
•Try to save the customer inconvenience.
For example, the motor trade gives top priority to maintaining stocks
of 'vehicle off road' spares.
•Exceed your customers' expectations.
For example, promise delivery in ten days, but actually deliver in
seven. Always keep your promises.

10. •Keep customers informed about any problems, and make it
easy for them to contact you.
For example, by providing a free phone number and the direct email
address of the member of staff responsible for their account.
•Use your website to give customers the services and
information they want.
For example, you could provide a simple ordering system using
secure servers, useful information - including answers to frequently
asked questions (FAQs), and technical advice - or a tracking system
for orders placed.

11. 2.3. Use appropriate technology.
•A good database system can help you record, organize
and plan your contact with customers.
Make sure information from your website can be
transferred to your main database.
•Contact management software may be a useful tool if
you have a lot of high-value customer accounts.
You will need to explain the advantages of the system
to employees, and provide training and incentives for
use.

12. 2.4. Give customers a personalized service.
•A common way to achieve this is by giving each
customer an account manager.
•Personalise all communication .
•Personalise the email addresses of customer-facing
employees (eg firstname@yourcompany.co.uk).
•If you use computerized telephone systems, give
customers the option of talking to an operator at any
time.

13. The more you know about customers, the better you can
meet their needs.
3.1. Create opportunities for feedback.
•Ask new customers why they chose you over the
competition, and existing customers what you could do
better.
•Set up a customer hotline, and make sure the number is on
every piece of communication you send out.
•Get feedback online by putting an email response form or
forum on your website.

14. •Forums may need filtering or editorial control. Make
sure you have time to deal with this before setting it up.
•Consider making part of your website registration-only
to allow you to get more information about customers.
•Encourage customers with a concern to contact you.
You may then have a chance to rectify an issue before it
has escalated to a complaint.
Complaints are a vital indicator of what needs to be
improved - and how to gain a competitive advantage.
Carry out customer satisfaction surveys. Keep the
questions brief and specific, and offer an incentive as an
inducement to return the form.

15. 3.2Contact any customer who has stopped buying from you
(a lapsed customer) and find out the reason.
Assign a skilled person to this task, otherwise customers
tend to give easy answers, such as "you are too expensive",
which may hide the real reasons.
3.3. Monitor and analyze the contact you have with
customers.
•Keep a record of customer feedback to help you identify
problem areas.
Find out what caused each problem.
•Use hit analysis software to discover which of your web
pages are most popular.
•Call analysis software lets you monitor selling and levels
of satisfaction.

16. If you keep a dialogue going with customers, they will be
more likely to buy from you in the future.
4.1. When marketing - or selling - to customers, divide
them into at least three groups, and plan a different
type of communication for each.
•Group one is potential customers who have not yet purchased
anything.
For example, someone who has made an questioning as a result of an
advertisement.
The aim of your communication is to build interest in your
products. You may also be trying to make a sale at this early
stage.

17. •Group two is customers who have made a purchase.
Your aim is to increase the frequency of their buying
and to sell them other products in your range.
•Group three is your premium customers, who already
make regular purchases.
Your aim is to turn them into 'advocates' who
recommend you to their contacts.
Your communication is based on showing your
appreciation and keeping them informed, rather than
selling them products.

18. 4.2. Only offer products that match customers'
needs.
•Ask your customers which of your products they are
interested in.
For example, send out a questionnaire.
•Regularly email, mail or phone them with special offers,
and news about your new products.
Suggest products which will enhance or upgrade what they
have already bought.
•Include a checkbox in your written mailings, or on your
website, that customers can tick to confirm they want to
receive future communications.
•Ideally, you should anticipate when they need to re-order.

19. 4.3. Have regular contact with customers.
For example:
•Telephone key customers regularly to get feedback, or
send them a newsletter or e-newsletter.
•Send best wishes for Christmas, anniversaries or other
occasions.
Be original. The challenge is to distinguish yourself
from all other suppliers.
For example, you could avoid the Christmas post by sending an
electronic greetings card direct to your customers.

20. One route to achieving customer loyalty is to become friends
with your customers. When entertaining customers, choose
events that reflect your company image and set you apart
from your competitors.
5.1. For your most important customers, entertain on a one-to-
one basis.
•An occasional lunch or an after-work drink can be fitted into
most people's schedules.
•Activities like golf provide a relaxed, non-work
environment to get to know people in.
•Find out what your customer's interests are, and indulge
them.

21. 5.2. If you need to entertain large numbers of
customers, consider having an annual event.
This need not be expensive.
For example:
•A specialized travel company might put on a video or
slide show each year, plus an exhibition of customers'
photos.
•An injection molding company might combine a
presentation on state-of-the-art plastics technology (by
a suitably high-profile speaker) with some kind of
social networking event afterwards.

22. Give top customers more
Small firms often find that a few big customers are
responsible for a large proportion of their profits. Keeping
these customers happy is essential - so you should reserve a
special level of service for them.
Give key customers extra benefits which are particularly
visible.
Make it easier for them to buy from you.
•Waive restrictions such as minimum order quantities.
•Give them first options on opportunities such as
discounted stock clearances.

23. •Set up a dedicated extranet ordering system.
Let key customers know you value them.
•Invite them to special events, or give them special
discounts.
Reinforce the idea that they are valued customers in all
communication with them.
Ask for their opinions before making significant decisions.
For example, discuss your ideas for a new product, or a new brochure.
Invite them to join a club.

24. •You could give key customers the opportunity to meet
regularly to discuss important issues and enjoy
networking opportunities - broadening the scope and
value of what you offer them.
Only make promises you can keep.
If you say you will speed up delivery but then dispatch
goods late, your special service will be meaningless.

25. A successful loyalty scheme pays for itself by encouraging
more frequent purchases.
The most common loyalty schemes are based on offering
rewards to loyal customers.
6.1. A cumulative (or 'retrospective') discount gives
customers money back whenever they reach specified
spending targets.
• Retail businesses can offer loyalty cards which work this
way.
•Your accounting system may need to be able to track the
purchasing activity of each customer and flag up the
discounts as they are earned.

26. If customers have to ask for the discount, you may achieve
less loyalty as a result.
6.2. Some schemes offer customers a discount off
their next purchase.
For example, you may issue discount coupons. If they are only valid for
a limited time, you also encourage prompt action.
•Be aware that discounts may cheapen your product in the
eyes of the customer.
For this reason, businesses often prefer to make offers such as
'20 per cent extra free'.
Some schemes offer the customer rewards.
One danger of discounts and rewards is that your customer
might have made the purchases anyway, in which case you are
wasting money.